Housing starts in the U.S. declined 2.8% over the month to an annualized rate of 1.465 million in April, above forecasts for 1.42 million. This was below the revised March estimate of 1.507 million. Overall housing starts were up 4.6% over the year. Regarding the two major components of aggregate housing starts, single-family was at a rate of 930,000, down 9% from the previous month, while units in buildings with five units or more grew 14.3% to a rate of 529,000. Building permits, as a leading indicator of future activity, came in at a seasonally adjusted annual rate of 1.442 million, 5.8% above the prior month.
The ABA Office of the Chief Economist interprets the monthly decline in housing starts as evidence that housing construction remains constrained by affordability challenges and tight financing conditions. If builders continue to scale back single-family production, construction activity and the mortgage pipeline are likely to soften. In contrast, modest annual growth in multifamily development is expected to provide some support for construction loan demand among banks.
